The Influence of Government Regulation on the Performance of Small and Medium Enterprises- the Case of Automobile Parts Industry in Nairobi Kenya

Abstract

The study involves discovering the influence of government regulations on the growth of small medium enterprises in Nairobi County. The focus of the study was on those who sell automobile spare parts in downtown Nairobi. Despite the high potential of small medium enterprise dealing with spare parts thriving worldwide, the ones in Africa and especially Kenya still have some challenges. The specific objectives of the study were to find out the taxation policies affecting automobile operators in Nairobi CBD, to assess how the licensing processing is affecting automobile operators in Nairobi CBD and to identify the import and export rules affecting automobile operators in Nairobi CBD. This study2adopted a descriptive2survey design to2research which is the process whereby the researcher uses sample survey where data collection about the sample collected through self-administered questionnaires. The study had a target population of 600 small scale auto mobile dealers within Nairobi central business district. From the population a sample of 60 respondents was randomly picked using stratified random sampling. The study showed that 76.6% of the respondents were conversant with tax administration and the use of integrated tax affected the operations of the SMEs and the responses varied with majority 65% indicating to have been affected. The study results that licensing procedures and laws affect business operation of the respondent this was indicated 76.6% of the respondents. This was illustrated by 90% of the respondents who indicated that without a single license the business cannot be allowed to operate within Nairobi. The study concluded that the challenges of government regulations in the growth of small medium enterprises in Nairobi area have a positive and significant relationship on automobile parts sector within the NCBD. It also concludes that the multiplicity of licensing has affected the growth of the SME. The study recommended that government should control the cost of compliance and non-compliance to business permit so as to enable the operation of the SMEs in Nairobi run smoothly, at the same time evaluate the taxation policies that affect the growth of the SMEs in Nairobi.